Between 14 December 2012 and 1 October 2014, PhonepayPlus received 68 complaints from consumers in relation to adult and glamour video subscription services (the “Service(s)”) operated by the Level 2 provider, Circle Marketing Ltd (the “Level 2 provider”) until January 2014 when the Services were novated to another Level 2 provider, Cloudspace Limited (“Cloudspace”). The Services were operated under the names “UrHottestBabes”, “Fun-sexygirls”, and “HornyHotBabes” on the premium rate shortcodes 89333, 85222, and 88150. Consumers were charged £3 or £4.50 per week depending on the Service they engaged with. The Services commenced operation in March 2012 and June 2013 and continue to be operated by Cloudspace.
The Services were promoted online via banner advertisements or a wireless application protocol (“WAP”) push message which was sent to consumers. Consumers subscribed to the Services, using mobile originating (“MO”) opt-in or a WAP link. Consumers could also engage with the Services using an Android application (the “Application”) which utilised a MO opt-in.
The majority of complainants stated that they had received unsolicited, reverse-billed text messages but that they had not engaged with the Service. In addition, some complainants reported receiving unsolicited charges and they had not received any text messages from the Services. Further concerns were identified regarding the Application, as the PhonepayPlus Research and Market Intelligence team (“RMIT”) tested an Application for the Services and found malware that suppressed the receipt of Service messages.
The Executive raised the following potential breaches of the PhonepayPlus Code of Practice (12th Edition) (the "Code"):
• Rule 2.3.1 - Fair and equitable treatment
• Rule 2.3.3 - Consent to charge
• Rule 2.4.2 – Consent to market
The Tribunal upheld all the breaches of the Code raised. The Level 2 provider’s revenue in relation to the Services was within the range of Band 3 (£250,000-£499,999). The Tribunal considered the case to be very serious and imposed a formal reprimand, a warning that if the Level 2 provider fails to demonstrate that it has robust verifiable evidence of consumer’s consent to charge in the future it should expect to receive a significant penalty, a fine of £130,000 (which includes a £20,000 uplift which was imposed as a result of the Level 2 provider’s relevant breach history), and a requirement that the Level 2 provider must refund all consumers who claim a refund, for the full amount spent by them on the Services, within 28 days of their claim, save where there is good cause to believe that such claims are not valid, and provide evidence to PhonepayPlus that such refunds have been made. In addition, a requirement was imposed that, within three months of the Level 2 provider re-commencing trading, the Level 2 provider must submit to a compliance audit of its procedures for ensuring consumers provide valid consent to be charged and that it has robustly verifiable evidence of that consent, the recommendations of the audit must be implemented within a period defined by PhonepayPlus, the audit must be conducted by a third party approved by PhonepayPlus and the costs of such audit must be paid by the Level 2 provider.